Optimizing Financial Processes

#IRDAI’s decision to proposed cap the #bancassurance business limit to 50% marks a significant shift in the Indian insurance distribution landscape. The move aims to curb the over-reliance on bancassurance channels and promote a more diversified insurance ecosystem. Impact Analysis: Distribution Shift: Banks, which have long dominated the distribution of insurance products, will face limitations on how much business they can handle under the bancassurance model. Companies with deep bancassurance ties will need to explore other channels such as direct sales, brokers, and digital platforms. Increased Competition: The 50% cap could lead to more competition in the market as insurers diversify their distribution networks, leading to a rise in agent networks, direct selling, and online insurance platforms. Focus on Customer-Centric Models: As bancassurance becomes more constrained, insurers might focus on improving customer engagement and reducing mis-selling, which has been a concern in the past. This could push more companies to adopt the broking model, which is seen as less prone to mis-selling Risk of Unequal Impact: While the regulation targets the bancassurance model, it could disproportionately affect public sector banks (PSBs) that have a higher share in bancassurance business. . Policyholder Benefit: On the positive side, the change could encourage more transparent and diverse insurance products, benefiting policyholders with better options and reduced mis-selling Overall, this change aims to make the insurance market more robust and less dependent on banks, which could eventually lead to a healthier and more competitive market. However, insurers will need to adapt quickly to this shift in distribution strategy.

Balance Sheet Optimisation: A Prudent Approach to Sustainable Growth Banks operate in a highly regulated and competitive environment, where balance sheet optimisation is essential for long-term sustainability. Striking the right balance between liquidity, profitability, and risk requires a structured and strategic approach. Balance sheet optimisation involves managing assets, liabilities, and capital efficiently to enhance returns while maintaining regulatory compliance and financial stability. It requires an in-depth understanding of key metrics such as the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) to ensure liquidity resilience, Risk-Weighted Assets (RWA) to manage capital efficiency, and Net Interest Margin (NIM) to maximise profitability. Effective duration and basis risk management also play a critical role in mitigating interest rate risk. A well-optimised balance sheet delivers benefits beyond regulatory compliance. It strengthens financial stability, enhances shareholder value, and enables institutions to navigate economic cycles with greater resilience. However, achieving this requires careful consideration of several key factors. Liquidity management remains a priority, as maintaining an adequate liquidity buffer is essential for financial resilience. Banks need to align funding sources with asset maturities, optimise their high-quality liquid asset (HQLA) portfolios, and conduct stress tests to assess potential liquidity risks. At the same time, holding excessive liquidity can reduce profitability, making it crucial to find an optimal balance. Capital efficiency is another important consideration. By effectively managing RWAs, banks can allocate capital to areas that generate the highest risk-adjusted returns. Strategies such as optimising credit exposures, diversifying assets, and implementing capital-light business models can enhance return on equity (ROE) without breaching regulatory constraints. Interest rate risk and market risk also require close attention. Effective asset-liability management (ALM) strategies help banks navigate interest rate volatility, ensuring that duration mismatches do not erode profitability. Hedging strategies, dynamic repricing approaches, and robust risk modelling contribute to stronger interest rate risk management. Diversification of funding sources is essential to reduce refinancing risk and enhance stability. Over-reliance on a single funding channel can expose banks to disruptions, while a well-diversified funding structure—including retail deposits, wholesale funding, and capital market instruments—improves resilience. Credit risk optimisation plays a crucial role in enhancing risk-adjusted returns. Banks that refine risk-based pricing, improve borrower selection, and implement effective portfolio diversification strategies can strengthen credit risk management while maintaining growth potential.

𝗪𝗵𝘆 𝗣𝗼𝗹𝗶𝗰𝗶𝗲𝘀 𝗟𝗮𝗽𝘀𝗲: 𝗧𝗶𝗺𝗲 𝘁𝗼 𝗧𝘂𝗿𝗻 𝗜𝗻𝘀𝗶𝗴𝗵𝘁 𝗶𝗻𝘁𝗼 𝗔𝗰𝘁𝗶𝗼𝗻 Policy lapses are one of the most significant challenges facing the insurance industry, affecting both customers and insurers. A lapse occurs when premiums are not paid within the stipulated timeframe, resulting in the termination of coverage and erosion of long-term financial security. Understanding why this happens is essential to designing effective solutions. The most common cause is 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝘀𝘁𝗿𝗲𝘀𝘀. During periods of economic uncertainty, policyholders often redirect limited resources towards immediate needs, considering insurance as a deferrable expense. Another factor is 𝗹𝗼𝘄 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗮𝘄𝗮𝗿𝗲𝗻𝗲𝘀𝘀—many customers underestimate the importance of continued coverage or fail to grasp the long-term value of policies. Equally important are 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗺𝗶𝘀𝗮𝗹𝗶𝗴𝗻𝗺𝗲𝗻𝘁 and 𝗼𝘃𝗲𝗿𝘀𝗲𝗹𝗹𝗶𝗻𝗴. Need-assessment is a critical element of the Policyholder journey that remains missing. Policies that do not match an individual’s life stage, goals, or liquidity needs tend to lapse when expectations are not met. Inadequate communication and follow-up from insurers add to the retention woes. Insurers generally engage with the policyholders just before renewals, thus remaining in the dark about their situation. With consistent engagement after the sale, one could assess and address the issues faced by them. 𝗔𝗜-𝗯𝗮𝘀𝗲𝗱 𝗿𝗶𝘀𝗸 𝗺𝗼𝗱𝗲𝗹𝘀 can provide triggers to identify customers who have a higher probability of lapsing. Timely guidance and product benefit awareness communication can significantly help in improving persistency. Ultimately, lapses are not just about affordability—they reflect a gap in financial planning, engagement, and trust. Strengthening customer education, providing flexible payment solutions, and aligning products with real needs can go a long way in reducing lapses and ensuring families remain financially protected. #insurancestrategy #customerengagement #policypersistency #customerretention #lifeinsuranceindustry

The external cost of poor cashflow management. How to mitigate against delayed customer payments. As Treasurers, there's often focus on internal efficiencies, optimizing collections, tightening credit terms, streamlining invoicing. But what happens when the real issue isn’t internal… but lies with the customer’s own poor cashflow management? Yes, your customers might be experiencing operational or financial inefficiencies, delaying their ability to pay on time despite your best efforts. Here’s how you can proactively manage this risk: ➔ Tiered Credit Assessment Go beyond the standard credit check. Evaluate a customer’s cashflow patterns, business model sustainability, and industry seasonality. This helps anticipate delays from otherwise “good” customers. ➔ Build Cashflow-Based Payment Terms Negotiate flexible terms that align with the customer’s own cash inflow cycles. For instance, if their cash peaks mid-month, structure payment due dates accordingly to improve compliance. ➔ Offer Early Payment Incentives, but Smartly Use discounts as a tool only where margin allows. Structure tiered discounts that encourage faster payments without hurting profitability. ➔ Strengthen Customer Engagement Sometimes, late payments are a symptom of a deeper issue. Regular check-ins with key customers can offer insights into their payment capacity and open doors for early warnings or renegotiations. ➔ Use Trade Credit Insurance This provides a safety net where customer default risk is significant. It may not solve liquidity challenges directly, but it protects the downside. ➔ Diversify Customer Base Overreliance on a few customers with recurring cash issues is a major liquidity risk. Ensure your receivables portfolio is balanced. ➔ Set Up Predictive Monitoring Tools Integrate AI-based or analytics tools that flag customers exhibiting signs of stress like increased days sales outstanding (DSO), irregular order patterns, or extended communication gaps. How have you handled situations where your customers' own liquidity problems put your cashflow at risk? What worked? What didn’t? ♻️ Repost & Share.

In 2023, healthcare providers faced a staggering $25.7 billion in claims adjudication costs—a 23% increase from the previous year. Alarmingly, over 50% of these denials were ultimately overturned and paid, indicating that nearly $18 billion was potentially wasted on disputes over claims that should have been approved initially.   This inefficiency not only strains providers’ financial viability but also diverts critical resources away from patient care. The lack of a unified claims submission system, coupled with each payer’s unique rules, creates a labyrinthine process prone to errors and delays. Moreover, the largely manual nature of claims submissions exacerbates the problem, especially amid widespread staffing shortages.     It’s imperative that we bridge the gap between payers and providers by optimizing resource utilization, streamlining administrative processes, ensuring accurate reimbursement and ultimately improving patient outcomes. By addressing these systemic issues, we can redirect valuable resources back to where they belong — enhancing patient care and advancing the health of our communities. We break down the findings — and how we can fix this — in my latest Premier Inc. blog with Soumi Saha and Mason Ingram. Read it here: https://lnkd.in/dcfswqz8  

📚 💶 💰 RTR #37 - FX Revaluation (Foreign Exchange Revaluation) 📌FX Revaluation is the process of adjusting the value of foreign currency-denominated assets, liabilities, or open items in the books of accounts to reflect the current exchange rate at the reporting date (e.g., month-end or year-end). 🔹It ensures that the company’s financial statements comply with accounting standards (such as IFRS, US GAAP, or Ind AS) by presenting accurate values of foreign currency balances. 👉Key Points about FX Revaluation 💡1. When: Done at month-end or year-end during financial close. Required whenever there are outstanding balances in foreign currency. 💡2. Where Applied: ✅Accounts Receivable (AR) – open customer invoices in foreign currency. ✅Accounts Payable (AP) – open vendor invoices in foreign currency. ✅General Ledger (GL) – foreign currency bank balances, loans, intercompany balances, etc. 💡3. Method: Compare historical exchange rate (transaction date rate) vs closing exchange rate (month-end). Adjust the difference as Unrealized Gain or Loss in P&L. 💡4. Accounting Entries: Example: A company has a USD payable of $10,000. At booking date: 1 USD = ₹80 → Liability = ₹800,000 At month-end: 1 USD = ₹82 → Liability = ₹820,000 Difference = ₹20,000 (Loss) Journal Entry: Dr. FX Loss (P&L) 20,000 Cr. Accounts Payable (Liability) 20,000 If the exchange rate decreased, it would be an FX Gain. 💡5. Standards Reference: IFRS (IAS 21): Effects of Changes in Foreign Exchange Rates. US GAAP (ASC 830): Foreign Currency Matters. 💡6. SAP T-Codes for FX Revaluation: F.05 → Foreign Currency Valuation FAGL_FCV → FX Valuation in New G/L OB59 → Define valuation methods ✅ Purpose: ✔️Ensures assets and liabilities are shown at fair value. ✔️Recognizes FX gains/losses in the period. ✔️Provides accurate financial reporting for management and auditors. #FXRevaluation #Foreign #Currency #Revaluation #RecordToReport #RTR #R2R #GeneralLedger #GL #Intercompany #AccountsPayable #AccountsReceivable #Accounting #Finance #Accountant #Professional #QuickBooks #Oracle #SAP

U.S. dental support organizations (DSOs) are turning to modern revenue cycle management (RCM) technology to tackle costly insurance claim denials and streamline operations. Cloud-based RCM platforms can unify insurance, billing, and patient data across all practices, providing centralized dashboards and real-time analytics. By eliminating redundant systems and automating workflows end-to-end, DSOs gain clearer financial visibility and tighter control over claims. For example, one DSO reports that real-time eligibility verification built into scheduling reduces claim denials and administrative back and forth by catching coverage issues before treatment. These integrated systems ensure patient and payer data flow seamlessly from intake through payment, closing gaps that cause revenue leakage. Automation and AI also play a key role in scrubbing claims for errors before submission. AI-enabled coding tools can interpret clinical notes and automatically assign the correct procedure codes, staying current with the latest coding rules. When errors are caught early, first-pass claim approval rates soar. In fact, industry reports show that intelligent claims engines improve first-pass claim approval rates by validating data and codes against payer rules. This translates into fewer rejections and resubmissions, so billing teams spend less time on appeals. Similarly, automated claims scrubbing has been shown to cut manual claim-cleanup time by over 90%, yielding faster reimbursements and improved cash flow for practices. By reducing human error in coding and documentation, AI tools both reduce the number of denied claims and give staff more time to focus on complex cases. Verifying insurance coverage up front is another critical lever for denial prevention. Modern RCM suites often include real-time eligibility checks that automatically pull patient benefits and deductibles at scheduling. This means patients and staff know expected coverage before work is done. For DSOs, this upfront check is proving powerful: one study found that automating eligibility verification led to an 11x increase in checks and about a 20% drop in denials due to eligibility errors. In practice, real-time verification prevents surprise denials and billing surprises. Patients see transparent estimates, and practices avoid wasted claims submissions. Together with AI-fueled claims validation, real-time eligibility ensures that only clean, complete claims go out the door. Automated RCM platforms with built-in eligibility checks and AI-assisted coding not only slash denial rates, but also signal that the organization is committed to efficiency and growth. In practice, leading DSOs see measurably faster reimbursements, reduced revenue cycle costs, and fewer surprises on the balance sheet. 🔔 Follow me (Sina S. Amiri) for more insights on transforming dental RCM through AI and automation. #Dental #RevenueCycleManagement #ArtificialIntelligence #Tech

These numbers are staggering and unfortunately also directly lead to increased premiums for employers. I have seen issues on both sides here. On the plan side, if there are high approval or overturn rates for specific items requiring authorization, plans should be reviewing to determine if the service should continue to require auth or if the provider is getting approval 95% of the time, they should look at provider gold carding. On the hospital side, there is a lot of variation as to inpatient or observation even among hospitals in the same system. Some hospitals were also hesitant to give read only EMR access which served to lessen denials, but they were fearful it would increase them. Some hospitals would just appeal everything overloading the system (from the below data - 69% ended up paid, but the 31% that remains denied would have cost associated with reviewing this on both the hospital/plan side). Data integration could solve the denials for lack of information, which is actually the largest reason for a denial. This type of denial is a waste of time for both sides and a huge driver of wasted cost. mechanisms to address this would be a huge system improvement. "Hospitals and health systems spent an estimated $25.7 billion in 2023 contesting insurers’ claims denials, translating to just over $57 in additional administrative costs per claim, according to a report from provider group purchasing organization Premier. Premier calculated the total spend by multiplying providers’ reported 15% denial rates against the 3 billion medical claims processed by insurers annually (as of 2020 statistics from the Council for Affordable Quality Healthcare). The group also found that 69% of those 2023 contested claims were eventually paid out by insurers, also up from 2022’s 54% ultimate payout rate. Extrapolating the 2023 rate suggests nearly $18 billion “was potentially wasted arguing over claims that should have been paid at the time of submission,” Premier wrote in its report. In 2022, that estimate was $10.6 billion. Both tallies represent the provider side of the face-off, Premier noted, and do not represent the billions spent by payers."

After 100 calls with many insurance companies, one trend was clear: they lose millions annually to fraudulent claims. The Coalition Against Insurance Fraud (CAIF) estimates that insurance fraud costs the US $308.6 billion annually. These claims slip through manual review processes due to human error. A mid-sized regional insurer built a new review process using Pulse’s OCR models that goes beyond simple data extraction: - Automatically flags inconsistencies between written statements and - submitted photos - Identifies suspicious patterns like identical damage descriptions across multiple claims - Detects unusual timing patterns that suggest staged accidents - Cross-references medical terminology with reported incidents to validate treatment necessity Business impact in the first few months of deployment: already a 10%+ reduction in fraudulent payouts and 67% faster processing for legitimate claims, leading to millions of annual savings. Excited to see what everyone’s building with Pulse!

Insurance Quarterly Report Amidst the fragmented and scarce availability of insurance data in Indonesia, we are proud to present the second edition of our Insurance Quarterly Report for Q1 2025 by Indonesia Financial Group (IFG) Progress. Below are four key findings and their implications for the insurance industry by Q1-2025: 1. Life Insurance Sector: Profit Improves, But Investment Income Plunges Finding: The life insurance industry recorded a post-tax profit of Rp5.3 trillion (↑132% YoY), mainly due to lower PAYDI redemption claims. However, investment income fell by 95% YoY, driven by bearish bond markets. Implication: Reliance on investment returns is becoming riskier. Life insurers must diversify investment portfolios and enhance underwriting profitability. Persisting on PAYDI without reform could expose insurers to market volatility and reputational risks. 2. General Insurance Sector: Claims Rise Amid Stagnant Premium Growth Finding: General insurance premium income stagnated (-0.04% YoY), while claims increased by 4.5%, notably in property and credit insurance. Property insurance claims saw their highest increase in 2 years. Implication: Insurers need to tighten underwriting standards, especially in high-risk lines like property and credit. Rising loss ratios in these lines threaten profitability and require reserve strengthening to maintain solvency. 3. Structural Profitability Risk in Life Insurance Finding: Life insurance still suffers from an unhealthy combined ratio of 106% and a claim ratio of 81%, meaning operating costs and claims exceed premium income. Implication: This raises long-term sustainability concerns. Without better risk pricing or cost containment, many life insurers may struggle to maintain profitability, especially as investment income becomes less reliable. 4. Regulatory Shifts and Legal Risks are Emerging Finding: A Constitutional Court ruling limits insurers' ability to unilaterally cancel policies due to "utmost good faith" violations. Additionally, new SEOJK regulations on health insurance (co-payment, medical board) are being introduced. Implication: Insurers face greater legal risk and regulatory burden. Product terms, claim management, and customer communication strategies must be overhauled to remain compliant and competitive—especially in health and life lines. Find the complete link: https://lnkd.in/e8pSetmS. The report is prepared by Rosi Melati, Ezra Pradipta Hafidh, FSAI and Nada Serpina